Odds and Ends: Sharklets, CAPA analyzes the Middle East

A320 Sharklet: Jon Ostrower has a detailed piece about the wing work needed to retrofit the A320 with sharklets and some thoughts about what this means for the neo.

Dubai Air Show: The Center for Asia-Pacific Aerospace (CAPA) does an analysis on the orders placed at the Dubai Air Show and what these mean. CAPA has a couple more links within the article that are worth clicking. One link is about Bombardier and its CSeries progress.

Middle East: More on the region: Bloomberg has this report in which Emirates Airlines is considered a safer investment than the sovereign risk of Dubai.

Long term strategies at Boeing and Airbus for long haul aircraft need a special focus on Middle East airlines. We see growth at the big three Middle Eastern airlines (Emirates, Qatar, Etihad) as a trend that will not end any time soon and will come heavily at the expense of European and Asia-Pacific airlines (e.g. Lufthansa, Air France, British Airways, Thai, Singapore, Qantas). The big three airlines are all now among the fifteen largest long haul airlines in the world in terms of widebody fleet plus backlog (Emirates is the world’s largest and Qatar the third). Compared to other regions, the Middle East is an outlier in that planned fleet growth is much larger than could be justified by the region’s GDP growth alone. But, this fleet growth is all about acting as a “sixth freedom” hub for long haul traffic, particularly connecting the Asia-Pacific region with Europe and Africa.

Pratt & Whitney: Time magazine named the GTF one of the top 50 inventions in 2011. The Montreal Gazette has this take on the Time honor. (We’d link directly to Time’s article, but it is for paid subscribers only at this point.)

Boeing Wichita: News broke last week that Boeing is studying closing its Wichita operation, which is dedicated to military business. With the defense budget under attack, Boeing is finding it hard-pressed to keep Wichita open, according to news reports. The news sent Kansas politicians scurrying and set off some irate comments because Boeing promised Kansas 7,500 jobs in the KC-X tanker competition if it won (as it did). The politicians say Boeing promised Wichita the tanker finishing business and it better keep its promise. The Wichita Eagle has this latest article, which also has some interesting history of Wichita’s role in aerospace.

KC-46A Tanker: Speaking of the tanker, DOD Buzz and Bloomberg News have reports that Boeing is likely to lose money on its initial contract with the tanker. This is not particularly new; this was first reported earlier this year. But the amount has grown from a $300m loss to $500m on a $4.8bn contract.

I’m still curious what part of the “S-curve” EK’s growth is at. I believe EK is probably at the “mid-point”. I don’t expect to see the crazy growth EK has shown the past 8-10 years to continue.

Also, I’ve been flying EK for decades and definitely have seen their quality go down the past few years. I’m not surprised given its rapid growth. Regardless.

Regarding the KC-Tanker-not surprised at this either, but hopefully it will be overall a profitable (or even) endeavor. A “win” for Boeing was somewhat of a loss for Airbus/EADS (at least in a strategic sense). That being said, I wonder if it was a Pyrrhic victory for Boeing.

The fact the first 18 KC-46As will be produced at a loss is old news. Had the USAF selected the A-330MRTT for the tanker, the first 18 would also have been built at a loss.

The EK order for the B-777 fits in with that airlines replacement of the A-330, A-340, and older B-77A/Es and some growth. But, even I question why an order for 50? To me this makes about sense as the 90 A-380 order of a few years ago that they made.

Different airlines have different fleet models. Many of these orders are being placed such that later arrivals replace earlier deliveries of the same model. So Emirates will use later A380 deliveries to replace the initial deliveries they have now. The real question is what is the secondary market like for an A380? It’s a niche airplane to begin with, the secondary market for those tends to be nearly non-existent. They will have less of a problem with the 777s. Those will be pretty easy to place in a decades time.

Without getting to far into politics, the Tea Party members believe in a strong defense.

There is no indication Boeing plans to cut any jobs on the KC-46A work, let alone 10s of thousands. Other programs in defense will get cut, as currently planned, like the T-X program. The USAF is already thinking it could refurbish the T-38s and give them more years of service, thus there may be no need for a new trainer, at least for now. For now, it seems the DOD is going to protect the KC-46 and F-35 programs while others get chopped from the budget. When the cuts do come, the C-17 program will be gone, but then again, the USAF has been trying to get out of that Boeing program for a few years now.

There will be no ‘across the board’ defense cuts. The cuts will be in programs that can be canceled or deferred without hurting the military forces.

I wonder what sort of outrage some commenters here would have displayed had Airbus won the contract and turned around and said that Mobile was not going to be used for final assembly.

It does seem that Boeing is, at the very least, trying to recoup some of their initial loss on the tanker program by getting some sort of government (federal, state, municipal) to give them some money in order to keep this plant open and perhpas even keep to their promise.

I find that, slowly, the world is learning what a “promise” from (the new?) Boeing means.